Attacks to strain France's terrorism victim fund

PARIS, Nov 19 (Reuters) - Friday's suicide bombings and
shootings in Paris killed 129 people. But France expects to
compensate more than 2,000 after the unprecedented attacks - a
payout likely to strain the country's compensation fund and
prompt changes to how it is financed, authorities and lawyers
say.

As police hunted for fugitives and the investigation widened
to trace the path of the attackers, France's public prosecutor
was compiling a list of victims to give the Guarantee Fund for
Victims of Terrorist and Other Criminal Acts, or FGTI, which
pays victims of designated terrorist incidents.

The fund, created by the French government in 1986 and
financed by a tax on each of the 80 million car, house and
business insurance policies in France, will then begin the
compensation process.

Each person killed would typically have up to 10 family
members who would be considered victims, said Françoise
Rudetzki, a member of the FGTI's board of directors. The fund
reimburses individuals of any nationality and counts spouses,
children, parents, siblings, grandparents and grandchildren
among those eligible.

There are also 352 people injured plus many more who were
present at the besieged restaurants or at the Bataclan, a
concert venue with a capacity of 1,500. That will bring the
total to more than 2,000 - the largest amount the fund has ever
faced, Rudetzki said.

Payment will vary. The families of someone killed, for
example, can expect to receive around 20,000 to 30,000 euros
($21,490-$32,235), according to Paris-based lawyer Géraldine
Berger-Stenger, whose clients include victims of terrorism.
Families might get an additional payment for economic hardship
from a death, according to a FGTI spokesman.

Because of the fund's financing scheme, less money is
available than in other countries. In Italy and Spain for
example, compensation to terrorism victims is funded directly
from the government budget and can include a life-time, monthly
payout.

After the Sept 11 attacks in the United States, the average
award from a special fund set up for victims was more than $2
million per payout.

FUND IN DEFICIT

Still, for the French fund, the sheer number of victims in
what is the worst atrocity in France since World War Two, means
compensation is likely to become a considerable strain.

Even before the latest attack, the fund was running into
deficits. Changes to French law in recent years led to an
increasing number of victims of non-terrorism crimes turning to
the fund, while the tax remained unchanged since 2004.

The fund had to dip into its 1.2 billion euro reserve, made
up of investments like stocks and bonds, for payouts, according
to FGTI spokesman Guillaume Clerc.

The fund had a deficit of about 200 million euros in 2014,
and 171 million the year before that, said Clerc, adding that
the reserve would have been exhausted in seven or eight years
without a boost in revenues.

Clerc said that because of the reserve and a recent increase
in the tax on insurance contracts the fund "has the means to
reimburse all of the victims. There is no worry about that."

Concerns about the fund have been mounting, however. In
November, 2014, France's finance ministry issued a report saying
that if the fund's finances did not improve, its ability to
handle a catastrophic event like 9/11 could be jeopardized.

On Oct. 30, just two weeks before the latest attacks, the
government announced that the current tax of 3.30 euros ($3.53)
per insurance policy would be raised by one euro, beginning on
Jan 1.

An official with France's Ministry of Justice said that if
the hike is still insufficient, "additional financing will be
provided to the fund."

The official, who declined to be named, said that the
government is considering changes to the system. "Our thinking
about the future of the fund also focuses on its continued
financing," she said.

FINANCING REVIEW

Given FGTI's challenges, Friday's attacks should prompt
authorities to review how the agency is financed, said lawyers
who regularly deal with victims.

"If you look at the number of deaths and injuries, it has
not been seen before," said Berger-Stenger, the Paris-based
lawyer. "A tax on insurance contracts is insufficient."

Compensation through the fund is important, attorneys said,
because the ability of victims to themselves sue perpetrators of
criminal acts is limited in France. Typically victims become
part of the civil portion of a criminal trial, where damages
awarded can also be relatively small.

The fund was created in 1986, in part through pressure from
a now-defunct victims' rights group created by Rudetzki, who was
herself injured in the bombing of a Paris restaurant in 1983.

Since its debut, it has reimbursed more than 4,000 victims
of terrorism, including 200 related to the shootings in January
at the satirical newspaper Charlie Hebdo and other places that
left 17 dead.

Guillaume Denoix de Saint Marc, founder of the Paris-based
Association for Victims of Terrorism, said the fund works "not
badly" and advances money quickly to deal with the cost of
funerals and other expenses.

However, he said victims often have to fight for payments
and sometimes are not considered victims at all. He pointed to
the Spanish and Italian compensation regimes as potentially
offering more support.

Clerc said the FGTI is not obliged to compensate everyone,
only those it believes is impacted by an attack. "We can't
compensate everyone in the 11th Arrondissement," he said,
referring to one of the neighborhoods under fire last Friday.
($1 = 0.9307 euros)
(Editing by Alessandra Galloni and Anna Willard)